Robustness as a corporate objective under uncertainty

Abstract

This paper examines the nature of the objective function of the firm when operating under conditions of uncertainty. Robustness is presented as a purposeful maximand for decision making both under conditions of certainty and uncertainty ‐ a robust decision being one in which the decision maker retains the maximum flexibility with regard to future decisions after an initial decision has been made. Its incorporation within a managerial objective function provides a measurable scale for making choices between alternative courses of action, including under conditions of internal organizational conflict and environmental reaction by other decision makers.